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The law books will have to wait for a change. I-1100 has been defeated.

***This post was originally posted on BreweryLaw.com, a blog devoted to beer law! The blog is published by Reiser Legal, LLC, a Seattle, Washington law office. Reiser Legal’s Douglas Reiser is our regular legal blogger.***

This year the elections were charged by an eagerness to reduce taxes and eliminate the government stranglehold on business. Nationwide, voters made it clear that they felt that big government had failed.

With voters looking to reduce taxation and governmental control, you would think that an initiative to eliminate Washington’s monopoly over liquor sales would prevail, right? How about an initiative that, as both sides would argue, would reduce the costs of beer and wine sold in Washington state? Hole in one, eh? Nay.

Washington voters listened to the issues and voted with their brains, and not their hearts. I firmly believe that Western Washington’s love for its communities, defeated these measures. They listened to the local businesses that they support and decided that I-1100 was not for them and their families. (Note: I-1105 was defeated roundly). The massive amount of money that was dumped into this initiative appears to have been put to good use, as public education significantly assisted the “No” campaign.

So, what’s next?

One thing is for sure, it was a close call. The I-1100 vote came down to the final votes. The dividing line is not too wide.

Secondly, many of the organizations that supported the “No” campaign, including the Washington Brewers Guild, are not against the concepts of liquor privatization and free markets. They simply do not want it to happen overnight.

The one sentiment that I believe most shared was that overnight deregulation could be disturbing for businesses in the industry. Most of these groups might have been willing to get behind a measure that built in gradual deregulation. Heather McClung, owner of Schooner Exact Brewing, stated that the Guild’s members favor “slow, steady growth in modernizing those laws.” So, its possible they would get behind some, better crafted, legislation.

Finally, this was a voter initiative and not a legislative measure. Public citizens drew up significant changes to Washington state law (called for the repeal of 26 state laws), and I believe that it frightened some people. If a more gradual measure was to pass through the legislature, it might have more footing.

In the end, I suspect that there will be a congressional push to get proposed legislation circulated in the legislature. In the next few years, the State of Washington will likely have some form of private liquor sales and a more deregulated alcohol business. I would take those betting odds.

You might be sick of Initiative 1100 by now (and please tell me below, if you are), but here is more fodder for the fire. Initiative 1100 is getting more and more face time, every time I turn on the tube.

The ad campaigns used by both sides showcase many in the local alcohol industry – some who are for it; others who are not. Here is a look at what is out there, so far.

No!

You probably have already seen the videos put out by the “No To Initiative 1100/1105” campaign. The two that are most often shown (and perhaps the only two out there) profile Washington winemaker, Darby English, and a Washington corner store owner.

Here is Darby English talking about why he believes the Initiative will harm his business:

Other ads showcase the safety hazards that many are pushing as the negative impact of the Initiative. This one is from a local firefighter:

Another video was put out by the Teamsters, who put 700-800 people to work in the alcohol distribution business. Take a look:

Yes!

But, where are the supporters videos? Until recently, it appeared that the “Yes to 1100” campaign wouldn’t put as much money into ads. But a recent video shows that maybe they were just saving all their guns for one ad. Check out this video of many of Seattle’s most prominent restaurateurs:

Many will say that this video is merely a collection of bar/restaurant owners, looking for cheaper liquor. But, the Yes to 1100 campaign has been out in the community getting video testimonials from many people in the alcohol industry. You can see some of these videos below.

What I really wanted to show are the real people out there that will be impacted by the Initiative. Most of us are merely beverage consumers who care about the bottom line. Through these people’s stories, I think you can get a better idea of the impact of this legislation. Hopefully, it will help you make your choice next month.

The author at Seattle Beer News, Geoff Kaiser, wrote a think piece about the new proposition, considering the Washington Brewers Guild. The Guild recently released a presser openly opposing the proposed legislation, citing concerns that “I-1100 is the greatest threat the Washington craft brewing industry has experienced in a decade.”

I first want to applaud Geoff for his very honest portrayal of the tug and pull he is experiencing on the issue. Truly, he is correct to say that there are many arguments to be made in support of, and in opposition to, Initiative 1100.

Chiefly, Washington brewers are focusing on the fear that an open marketplace allows massive beer sellers (Costco, Binnys, MillerCoors, etc.) free reign to cause disruption to the beer market in Washington.

Of course, the Guild is correct to state that passage of deregulation opens up the market and can cause disruption. But, as an open market fan, you certainly hope that opens opportunities to all people and businesses. The key in deregulation is to find your niche, become innovative and be more efficient. You have to beat the big guys – and Washington brewers can do that!

Anyways, we are not going to tell anyone how to vote. But, please read the Brewers Guild position, because you should see both the good and the bad of I-1100 before you decide to vote. Brewers know the business and their opinion should resonate well in the beer community. But, fear can be blinding.

***This article was originally posted on BreweryLaw.com, a beer law blog published by Reiser Legal, our legal writers***

The recent initiative to privatize liquor sales in the State of Washington is picking up steam. Though this is not about beer, there are many in the beer industry who are probably interested in a major change in alcoholic beverage regulation in our fine state.

Initiative 1100 is the proposed legislation. The group behind this initiative is Modernize Washington, a Seattle based public interest group, providing not only the spirit behind the proposed law – but the statutory language itself.

A recent press release from Costco, showing support for the bill, puts the issue at the forefront of legislation challenges in Olympia. Of course companies like Costco, who has over 400 retail locations – all selling alcohol, stand to gain significantly from having access to liquor, for sale in their stores.

The proposed initiative would enable retail outlets like Costco to obtain licenses from the state of Washington, permitting it to sell liquor and permitting it to obtain liquor from almost any source – including the producers themselves.

Modernize Washington provides the following list of items that are at the heart of Initiative 1100. Take a gander for yourself:

Current operators in good standing of contract stores will receive licenses to continue in business as a private retailer, if they wish to continue operating.

LCB will no longer distribute spirits. The state distribution warehouse will be sold to generate money for the state.

A new distributor can be licensed and may buy from any licensed distillery and sell to licensed vendors just like beer and wine sellers.

Any store or distributor currently licensed to sell beer or wine, and in good standing, will be able to obtain a license to sell spirits, for an additional license fee.

Local jurisdictions throughout the State can determine how many outlets they will allow in their city via zoning regulations.

The state’s ‘mark-up’ on spirits is eliminated.

The existing tax on liquor will remain and it will be up to the Legislature to adjust the amount of tax.

The initiative mentions a 10% tax on purchases of spirits by restaurants. This is not a new tax or a tax increase. This is a technical update to current law, and merely requires private sellers to collect the existing tax which is now collected only by state stores.

Repeals the “Three-Tier System”, a set of Prohibition-era “blue laws” which grant monopoly privileges to middlemen, at the detriment of consumers.

Frees the LCB from the burden of enforcing outdated and unhelpful “blue laws”. The LCB will instead focus its mission on enforcement of licensing laws and education against under age drinking and general abuse of alcohol.

All license fees from the new licenses to sell spirits may only be used for enforcing liquor laws and educating the public against underage drinking and other abusive alcohol consumption.

One of the points that strikes me as impressive, is their attempt to undermine the historic “Three Tier” distribution system that has followed alcohol sales from the end of Prohibition. The system demands that alcohol funnel through three sparties – the producer, the distributor and the retailer.

Over the past decade or so, states have weakened their stance on preserving this archaic system by permitting exceptions for brewpubs and even small breweries who sell and distribute their own products.

Modernize Washington has a copy of Initiative 1100 on their website. Take a gander at Section 15 on Page 9-10 of the document. This is one of the sections that directly repeals the “Three-Tier” distribution system that craft brewers, winemakers and distillers have grown to despise. This Section allows distillers to sell their alcohol to consumers and distributors on their own – without a middle man.

I welcome any comments on your views of Initiative 1100. As the document is extensive, we will continue to discuss its impact – as we learn more behind the initiative’s intent and application.